We get a lot of the extended warranty “should I buy” questions. The answers usually fall into the “put the same money in the bank” or “don’t buy a car that needs a extended warranty” fields. Perhaps we look at this slightly differently. Would you actually buy a new car with out any warranty if the price was reduced? How much would the price have to be reduced for this to work for you?
Perhaps you should compare the automotive industry to the motorcycle industry. I have never seen a motorcycle that came with a factory warranty that lasted more than one year. Every new motorcycle I look at comes with a “one year unlimited-mileage limited warranty.” Yet people still buy them without a significant discount. For some reason the auto industry can’t get away with less than 3 years/36,000 miles.
No, I would not. The reason is that if you study a reliability (failure curve) chart, the initial failure rate is higher than the failure once the car is running properly and broken in. The second year and later should be the most reliable period for most equipment, including cars. The technical term for these failures is “infant mortality”; you may call them “teething problems”. Even the most expensive equipment suffers from this. That’s why almost everything has at least a one year warranty.
Back in 1965 when I ordered a new Dodge Dart from the factory through the dealer (the factory was closer, so the direct pickup) Chrysler did the “factory pre-service” which the dealer normally is supposed to do. That part was deducted from my cost. THERE WERE STILL 11 THINGS WRONG AFTER THE FACTORY PRESERVICE.
The car had the famous 5 year & 50,000 mile warranty, at that time the best in the business. Under warranty I also had a head gasket leak, the front universal joint went at 49,900 miles and the console gearshift malfunctioned.
If cars came from the factory perfect, and only suffered wearout failures (not covered by warranties) I would go for the deduction. Unfortunately , life is not like that.
no i would not buy another extended warranty.put the $$$ in the bank.i would want the factory warranty that should be offered with all new car.if the price was reduced to a figure were the money that i save on the car would go in the bank immediatley.$2500 up i would take the deal
I used to administer warranty claims for a recreational equipment manufacturer. Believe me, the cost per vehicle is very small. If an average cost of all claims is, say $2500 for cars, and 10% of the vehicles have that problem (very high estimate)that would be $250 per vehicle. Warranty is a numbers game.
When a company really screws up such as GM with the 4-6-8 Cadillac engines, Olds with their fragile diesel, and the 1958 Chevy air suspension, the cost per car is significant, but those are exceptions rather than rule. And they get spread out over the whole company.
In my own case, the only dog we had was a 40 HP outboard motor, which consumed significant warranty dollars. All the other products cost less than $10 per year per unit on average.
So my deal is doomed because the manufacture would not reduce the price of the car significantly just because they did not have to provide warranty?
On the other side the car buyer would not buy the car without warranty
The buyer sees the warranty as valuable (like dominic $2500) but no way will we see $2500 off a no warranty car because the manufacture does not spend on average that amount of money in warranty related repairs.
While I will buy a used vehicle without a warranty I would never consider a new vehicle without one, even at a substantial discount. The vehicle warranty reflects, to some degree, the manufacturer’s confidence in the product (although lately the warranty has become more of a marketing tool), and I expect the manufacturer to stand behind any work needed to correct factory defects.
I realize nothing is perfect, and regardless of the brand it is possible to have problems, large or small, with a new vehicle. This is the reason for the warranty. Unfortunately, we’ve come to the point where some people expect a vehicle to last practically forever and never need anything, whether it’s maintenance or repair.
This partially explains the market for “extended warranties.”
Oldschool; you came to the right conclusion, and proved once more that purchased warranties are generally a lousy deal. On consumer products the payout is typically 10-11% of what you paid.
However, since manufacturers cannot discriminate who they sell to, for every 10 conscientious buyers/users there is one slob who mistreats the product, does only marginal maintenance, if any, and screams the loudests when something goes wrong. This type of buyer can actually profit from an extended warranty.
I have dealt with all of them; it’s amzing how you can abuse a snowmobile or an outboard motor and still “qualify” for a warranty award. One guy put $2500 worth of gas through his snowmobie (he had 5 kids) in 1967!!! He wore the machine out during the warranty period. Those machines did not have odometers.
On the other hand, if you knowingly get a great deal on a trouble-some car, an extended warranty may well pay for itself. If I bought a Jeep and did a lot of driving I could well profit from an extended warranty.
that is the way i was looking at it.never really looked at it the way dominick posted it.i guess with a extended warranty their is a sence of value.that was the mistake i made when i bought my first car i bought a extended warranty.
dominic i guess that the 2500 was way out of line.
Just buy a GM or Chrysler car right now!
Just a joke, but only because Obama guaranteed all new car warranties from these two today. Can he do that without Congress passing a law?
I believe in a new car warranty to take care of anything that came from the factory defective. It happens, but the buyer should not need to pay. On the other hand three years down the road, things are more likely the fault of dumb luck or the owners lack of maintenance. That I don’t believe the manufacturer should be paying for.